What Makes a Great Investment Property
If you’re considering buying an investment property, it’s important to recognise the features you look for may be very different to those you would seek in your dream home.
In the case of an investment property, you’re looking for a property that will attract renters, will be easy to maintain and will hold value in terms of yield with the further possibility of capital gain rather than a space you can envisage living in.
Together, these make any investment property purchase a business decision rather than one driven by emotion.
So, what are the top features to look for in an investment property?
Whether you’re looking to build a property portfolio, seeking to better manage your tax, or are hoping to earn extra income each month, the most important factor to consider when investigating your investment property options is what tenants will you attract?
That means taking a good hard look at suburbs that may not necessarily be your cup of tea but do tend to attract renters for a variety of reasons.
For example, regions around universities are often great suburbs to buy in because student demand for accommodation is consistent.
Similarly, the areas near hospitals and healthcare precincts, or where major industries are developing and thrive are often desirable for people seeking medium to long-term accommodation.
Once you’ve identified areas where you’re likely to have a good supply of renters, attention turns to considering which type of properties are likely to appeal most and what sort of features they should offer.
This is about putting yourself in a prospective tenant’s shoes, in the knowledge some properties might be more attractive to families, while others draw students or professionals.
For example, if you’re seeking a family as a tenant, think about the things they would need, looking at properties that might have extra storage, an enclosed backyard, a second bathroom and off-street parking.
On the flip side, if professional couples are most likely to be your tenant type, units with onsite parking, communal facilities and proximity to public transport might be a better option.
Regardless of what property you buy, every landlord should factor in ongoing maintenance and repairs, but some properties might be more prone to maintenance issues than others.
When inspecting properties, consider the age, looking specifically at big-ticket items that might need replacement like air-conditioners, hot water systems etc.
Where possible, ensure the property will also be low-maintenance in terms of gardening, mowing and upkeep.
If the property does include expansive or complex gardens or high-maintenance assets like pools, consider funding their upkeep and using service providers to ensure nothing goes awry. You can build this into your lease conditions.
When it comes to the financials of an investment property there are two key figures at play – the rental yield and potential capital gain.
Rental yield is the monthly figure you get in comparison to the cost of the property and the mortgage you have, while capital gain is the potential the property has to increase in value over the coming years.
Pick the right area to invest in and you might get both, but in the interim, it’s important to consider how much the property will cost you and how much income you are likely to derive from it based on demand in that area.
Then consider your personal financial circumstances to understand how it will serve you in both the short and long term.
Looking to buy an investment property or seeking to rent the one you own? Why not chat with one of our friendly Eview Proud Members – Australia’s Premier Network of Independent Real Estate Agents on 1300 438 439 to understand the options available